Investors' fears that major tech companies will lose their profit momentum after a powerful run during the pandemic is proving inaccurate, as some of the biggest players exceed expectations.
Investors have mostly shied away from mega-tech stocks for the past three months, shifting their money to cyclical and small caps, in the hope that these companies will benefit more from the reopening of the economy after a devastating blow from lockdowns.
But technology stocks are suddenly looking more attractive after gaining at least three megacaps in the past week. Below, we summarize the recent quarterly results of three major tech giants to show there may be more gains to be made in their stock prices.
1. Microsoft
In its report, Microsoft (NASDAQ 🙂 showed its revenue increased 17%, which was better than analysts' estimates, as the giant benefits from strong demand for are cloud computing services and software tools that support home workers.
Sales for the period ended December 31 rose to $ 43.1 billion, marking Microsoft's fourteenth consecutive quarter of double-digit sales growth. The revenue increase was fueled by the company's Azure cloud computing division, which saw its revenues increase by 50%.
The Washington-based software giant was a net beneficiary during the pandemic as many workers were forced to stay at home and connect through devices and services that the company sells.
At the same time, Microsoft's business customers have accelerated the shift to the cloud, where they can store data and run applications over the Internet, and teleconferencing is becoming the norm. As the company's new businesses thrive, the old products are also showing resilience. Personal computer sales surged in the quarter, boosting the company's flagship Windows operating system, while gaming revenues topped $ 5 billion for the first time in a single quarter.
The company's forecast for each of its three business units for the March quarter also exceeded analysts' forecasts, suggesting that 2021 could be another top year for the technology giant, whose stock is down 41% in the past year increased.
2. Netflix
The biggest surprise in the current revenue season came from the video streaming giant Netflix (NASDAQ :), which, despite fierce competition, once again proved its skeptics wrong. It blew past 200 million subscribers and said it would no longer need to borrow money. The company now generates to pay for all of its TV shows and movies without taking on more debt.
The spectacular growth in subscriber numbers came even as customers had many new streaming services available, including Walt Disney & # 39; s (NYSE 🙂 Disney +, Apple & # 39; s (NASDAQ 🙂 Apple TV + and AT & T & # 39; # 39; s (NYSE 🙂 HBO Max. These companies are trying to capture market share from Netflix, which had a first-mover advantage.
Some analysts believe it will be difficult to challenge Netflix and its appeal in a market with mostly mediocre offerings. The company's most feared competitors, such as Walt Disney and AT&T, are struggling as their financial position is severely strained by the pandemic.
While COVID-19 continues to wreak havoc on film and television productions, Netflix currently has more than 500 titles in post-production or ready to launch on the platform, the company said. Last week, it unveiled a movie release that will hit the platform every week of 2021 according to the Wall Street Journal. Netflix shares are up 4% this year, up from 66% last year.
3. AMD
Advanced Micro Devices (NASDAQ 🙂 once again proved that it is well on its way to gaining more market share, while its biggest rival, Intel Corporation (NASDAQ :), is struggling to overcome its manufacturing challenges.
AMD reported net income of $ 1.78 billion, or $ 1.45 per share, compared to $ 170 million, or $ 0.15, for the same period a year earlier. Sales were up 53% to $ 3.2 billion. With strong sales for the previous quarter, the California-based chip maker also gave a positive forecast.
First quarter sales will be approximately $ 3.2 billion, plus or minus $ 100 million. That compares with an analyst average estimate of $ 2.73 billion. For 2021, the company expected a 37% increase in sales, well above Wall Street expectations.
AMD struggled for years to survive in a market conquered by Intel, the world's largest chip maker. What has made AMD an energy brand is the company's strategy to outsource manufacturing and bring the newer and fastest chips to market ahead of Intel. This has led to an early rise in market share and a rise in AMD share in recent years. AMD stock is up about 90% over the past year, while Intel is down 20% over the same period.
